MANILA, Philippines - State-run National Development Co. (NDC) may opt to tap a syndicated loan from private banks to raise at least $300 million by yearend to pay the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) for a portion of their controlling stake in Metro Rail Transit Corp. (MRTC).
DBP president Reynaldo David said the sale of Landbank’s and DBP’s controlling stake in MRT would soon be finalized.
“We’re almost there,” he said.
The $300 million will serve as initial payment for the preferred shares of Landbank and DBP in the 17-kilometer MRT 3 along EDSA, said DBP executive vice president Theresa Quirino.
She said NDC may just borrow from banks instead of raising money through the issuance of bonds.
“NDC may do it through a syndicated loan,” Quirino said.
Asked about this plan, NDC general manager Ma. Lourdes Rebueno said nothing is final and that the agency is still studying its options.
Landbank and DBP acquired a 75-percent controlling stake in MRT early this year at an estimated shared cost of $800 to $900 million but they are required by the Bangko Sentral ng Pilipinas (BSP) to sell their holdings within the year.
Quirino said that after the initial $300 million payment, NDC would eventually acquire the controlling stake of the two government financial institutions.
The government is spending $130 million per year on equity rental payments, maintenance rental payments, and operating and administrative costs for the elevated railway, compared to annual revenues of $39.56 million.
Both the Department of Finance and the BSP reminded Landbank and DBP that government should not place a large portion of its investible funds in one venture that may not give returns in a short period, may end up at a loss, or compete with the private sector.
Finance officials said another option, if government fails to privatize MRT 3, is to raise the MRT 3 fares.
Based on a government study presented by the DBP, fares should be increased from an average rate of P12.50 to P60.50 to remain profitable.